Business ends year on sour note

Colin Brinsden, AAP Economics Correspondent

Australian businesses will be happy to see the back of another tough trading year even though the outlook for 2013 continues to be subdued, three separate surveys show.

The National Australia Bank's monthly survey found business confidence slumped in November to its lowest level since April 2009 when the nation was facing the depths of the global financial crisis.

Its business confidence index tumbled from minus one in October to minus nine in November, though trading conditions held steady in the month at minus five.

"The slump in confidence is likely to in part reflect businesses becoming depressed about the weak level of activity in the economy at present," NAB said, noting the forward demand indicators signal more weakness to come.

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The NAB survey did not take into account the Reserve Bank of Australia's (RBA) decision this month to cut the official cash interest rate to three per cent.

But JP Morgan economist Ben Jarman said firms "took a very dim view" of the central bank's decision to leave rates unchanged in November, when many had expected a rate cut.

Macquarie Research economist Gabby Hajj said the RBA now had more impetus to move rates lower in the new year.

"If not, a weakening business outlook will most definitely have negative implications for employment conditions," he said.

Financial markets are pricing a 50/50 chance of a cut to a record low of 2.75 per cent when the RBA board next meets in February.

A survey by accounting firm CPA Australia found small businesses were among the least optimistic in the Asia-Pacific region.

Its survey of six Asia-Pacific economies found only 60 per cent of Australian companies expected to grow their business in 2013, just ahead of Hong Kong at the bottom of the table on 59 per cent.

In contrast, Indonesia led the way with 94 per cent.

CPA Australia CEO Alex Malley said the results were worrying because small businesses were a barometer of the health of the broader economy.

It should also be "wake-up call" to decision makers of the need to focus on how Australia can best position itself to thrive in a highly competitive regional and global business environment.

The most optimistic of the three reports found most small businesses only saw revenues stabilising, rather than growing, in the medium term.

But software provider MYOB said its business monitor series from October 2010 to July 2012 showed an improvement after two years of revenue declines.

"Our research indicates the small and medium business sector has reached a turning point, with economic confidence and revenue expectations steady" over the first half of calendar 2012, MYOB chief Tim Reed said.